CitiMortgage yielded a new program to aid homeowners by allowing them to stay in their properties for an extra 6 months as long as they hand in their property deeds when the six months expire. The new program termed Foreclosure Alternatives Program is deemed to attract 1,000 home participants and is open to the states of Illinois, Michigan, Texas, Florida, New Jersey and Ohio. CitiMortgage may implement the program in all states.
In normal foreclosure procedure, the lender re-possesses the property legally by evicting the borrower. Citi’s Foreclosure Alternatives program is an expansion of the ‘Deed in Lieu of Foreclosure’ whereby allowing the homeowner to avoid a completed foreclosure. In addition, it allows the homeowner to remain in the home for an additional 6 months with the agreement that the borrower will return the deed of the property back to the lender.
A regular foreclosure will harshly impact a homeowner’s credit score. CitiMortgage’s program, an extension of the Deed In Lieu of Foreclosure will not harshly impact homeowners’ credit scores even if they agreed to abandon their homes in six months.
The pilot program is a way for banks to reduce the problem of homeowners who would prefer to walk away from their properties. It has been reported by Economy.com that more than thirty percent of United States mortgages are underwater. The term underwater describes the mortgage owed to be larger than the current value of the property.
Housing analysts fear that homeowners who owe at least 20% or more than their homes are currently worth are gaining incentives to walk away from their homes. Many fear that there is a slim chance that housing prices will rebound to the old levels in the near future.
Sanjiv Das who is CEO of CitiMortgage says that preventing foreclosure is of good interest to both parties of borrower and bank. The intention of the program is to aid the borrower in moving on to the next phase of their lives. Homeowners will still need to pay their electric and gas bills. The bank is willing to set aside a minimum of one thousand dollars per borrower for transitioning expenses including other costs involving the hiring of professional relocation advisers. Other expenses such as HOA and escrow charges will be decided based on each borrower’s ability to pay.
The program requires borrowers to upkeep their home in good shape and consent to meeting up with professional relocation advisers at least twice in a period of 30 days for the purpose of preparing themselves for the next stage of their lives.
The program was enacted to aid those who could not obtain a loan modification or a short-sale. To meet the requirements of this program, the homeowner must first be considered for a permanent modification. If the borrower fails to meet the requirements for a permanent modification, CitiMortgage will determine if the short-sale solution will work. A short-sale is when the bank accepts the purchase offer from a buyer which is often less than the mortgage amount owed. If the short-sale arrangement is now possible, then the borrower may be regarded as an applicant to Citi’s Deed in Lieu program or better known as the Foreclosure Alternatives program.
To qualify for the CitiMortgage’s program: 1. Borrower must have 1st mortgages with a clean title owned my Citibank. 2. Need to be currently residing in the property. 3. Need to be more than ninety days behind in mortgage payments.
Citi’s Foreclosure Alternative program was announced 3 months after Fannie Mae’s November 2009 announcement of their ‘Deed For Lease Initiative’.
The mortgage giant’s Deed For Lease program permits the borrowers to hand in their deeds in turn permits the borrower to lease the home for a year. Fannie Mae’s program transforms borrowers into leasers once they have turned in their deeds.
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